CEOs call for action on broadband

Wayne Boyd

Most chief executives (84 per cent) back the Government's removal of Telecom's effective broadband monopoly. But nearly half (46 per cent) have concerns that the Government has over-ridden private shareholder interests by making a unilateral decision to open the local loop copper wire to Telecom's competitors.

There's a warning also for new Telecom chair Wayne Boyd, as he works to get a grip on the company's financial position. Sixty-three per cent of CEOs believe the removal of the broadband monopoly will make a difference to their business costs - an indication that Telecom's ability to "rent seek" is over. Supporters point out that NZ is the second-to-last country in the OECD to move on this.

"Go faster, get it done", "It should never have been a monopoly in the first place", were common responses from SME bosses.

Auckland law firm boss: "Shareholder interest must be sub-jucated in this case; investors should have seen it coming. I would not like the Government's intervention to become a trend. While I agree with the outcome, the method used was unfortunate. Telecom should have been given a 'final warning' rather than a budget goodie." Chairmen were particularly scathing. Meat sector chair: "The local loop needed freeing up but not in the way it was done."

SOE chair: "The Government was right to act, but the way they acted was inappropriate. There was no incentive for Telecom to invest in new technology and infrastructure."

Other opponents were direct. Auckland banker: "This is part of a program of socialisation by stealth and the reinserting of Government as the centre of economic power."

Wellington investment banker: "Structural/regulatory separation may well be in our long-term interest, but no evidence of benefits and method of implementation [over-riding property rights] is clearly bad for a country's risk premium."

This outlook was shared by nearly all bankers and capital and securities markets players who were concerned that "sovereign risk" issues might impact on NZ's reputation as "regulators were over-ridden by politics if the Government didn't like it."

Investment banker: "Property rights must be protected - we are already seeing concern around the areas of political risk to NZ as an investment destination. "Governments are there to govern - my issue is not so much about the regulation, but rather: how did Government allow the communi-cation channel between them and Telecom to break down to the extent it did?"

Just 17 per cent said the move would impact on expansion plans.